U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10-QSB

(Mark One)

   X              Quarterly report pursuant to Section 13 or 15(d) of the
-------                      Securities Exchange Act of 1934
                     For the quarterly period ended June 30, 2001 or

-------        Transition report  pursuant  to  Section  13  or  15(d)  of  the
               Securities Exchange Act of 1934 For the transition
                         period from ________to________


Commission File No. 0-13836


                          SILICON VALLEY RESEARCH, INC.
                          -----------------------------
        (Exact name of small business issuer as specified in its charter)


              California                                94-2743735
--------------------------------------------------------------------------------
     (State or other jurisdiction of                  (IRS Employer
     incorporation or organization)                 Identification No.)


     6293 San Ignacio Avenue   Suite 201      San Jose, CA           95119-1231
--------------------------------------------------------------------------------
     (Address of principal executive offices)                        (Zip Code)

                                 (408) 361-0333
--------------------------------------------------------------------------------
               Registrant's telephone number, including area code


--------------------------------------------------------------------------------
(Former  name,  former  address and former  fiscal year,  if changed  since last
report.)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                                     YES X       NO___
                                        ---

State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practicable date.

             Common Shares Outstanding at July 31, 2001: 42,307,182

Transitional Small Business Disclosure Statement Format (Check One) YES    NO X
                                                                       ---   ---

         This report contains 21 pages. The exhibit index is on page 20.
<PAGE>

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES

                                      INDEX
<TABLE>
<CAPTION>
                                                                                            Pages
                                                                                            -----
<S>                                                                                        <C>
Part I.           FINANCIAL INFORMATION

                  Item 1.      Financial Statements

                      Consolidated Balance Sheet -
                          June 30, 2001 (unaudited)                                            3

                      Consolidated Statements of Operations -
                          Three Months Ended June 30, 2001 and 2000 (unaudited)                4

                      Consolidated Condensed Statements of Cash Flows -
                          Three Months Ended June 30, 2001 and 2000 (unaudited)                5

                      Notes to Consolidated Financial Statements                             6-9

                  Item 2.      Management's Discussion and Analysis of
                               Financial Condition and Results of
                               Operations                                                  10-17

                  Item 3. Quantitative and Qualitative Disclosures About Market Risk          17

Part II.          OTHER INFORMATION                                                        18-20

                  Item 1       Legal Proceedings
                  Item 2       Changes in Securities and Use of Proceeds
                  Item 3       Defaults Upon Senior Securities
                  Item 4       Submission of Matters to a Vote of
                               Securities Holders
                  Item 5       Other Information
                  Item 6       Exhibits and Reports on Form 8-K

                  Signatures                                                                  21

</TABLE>
                                  Page 2 of 21
<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheet
                                 (In thousands)

Assets                                                             June 30, 2001
                                                                   -------------
                                                                    (Unaudited)
Current Assets:
     Cash and cash equivalents                                       $     30
     Accounts receivable, net of allowances of $85                        427
     Prepaid expenses and other current assets                             60
                                                                     --------
                                                                          517

Fixed assets, net                                                         140
Other assets, net                                                         244
                                                                     --------
                                                                     $    901
                                                                     ========
Liabilities and Shareholders' Equity

Current Liabilities:
     Notes payable                                                   $     25
     Short term borrowings                                                 38
     Accounts payable                                                     307
     Accrued expenses                                                     301
     Deferred revenue                                                      55
                                                                     --------
                                                                          726
Long-term debt, less current portion                                      926
                                                                     --------
Deferred tax liability                                                     20
                                                                     --------
Commitments and Contingencies (Note 8)

Shareholders' Equity:
Preferred stock, no par value:
     Authorized: 1,000 shares
     Issued and outstanding: none                                        --
Common stock, no par value:
     Authorized: 60,000 shares
     Issued and outstanding:
       41,613 shares                                                   46,112
Accumulated deficit                                                   (46,883)
                                                                     --------
                                                                         (771)
                                                                     --------

                                                                     $    901
                                                                     ========

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                  Page 3 of 21
<PAGE>


                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                                   (Unaudited)
                      (In thousands, except per share data)

                                                          Three Months Ended
                                                               June 30,
                                                         2001           2000
                                                         ----           ----
Revenue:
     License fees and other                           $    131        $    585
     Maintenance and services                              402             184
                                                      --------        --------
     Total revenue                                         533             769
                                                      --------        --------

Cost of revenue:
     License fees and other                                 17              66
     Maintenance and services                              191             113
                                                      --------        --------
     Total cost of revenue                                 208             179
                                                      --------        --------

Gross margin                                               325             590
                                                      --------        --------

Operating expenses:
     Engineering, research and development                 212             160
     Selling and marketing                                 296             205
     General and administrative                            213             155
                                                      --------        --------
     Total operating expenses                              721             520
                                                      --------        --------

Operating income (loss)                                   (396)             70
                                                      --------        --------

Other income (expense):
     Interest income                                         0               6
     Interest expense                                      (23)            (25)
     Other, net                                           --              --
                                                      --------        --------
     Total other income (expense)                          (23)            (19)
                                                      --------        --------

Income (loss) before provision for
     Income taxes                                         (419)             51

Provision for income taxes                                --              --
                                                      --------        --------

Net income (loss)                                     $   (419)       $     51
                                                      ========        ========

Net income (loss) per basic share                     $  (0.01)       $   0.00
                                                      ========        ========

Weighted-average common shares
     outstanding (basic)                                40,740          35,517
                                                      ========        ========

Net income (loss) per diluted share                   $  (0.01)       $   0.00
                                                      ========        ========

Weighted-average common shares
     outstanding (diluted)                              40,740          37,411
                                                      ========        ========

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                  Page 4 of 21
<PAGE>


                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                 Consolidated Condensed Statements of Cash Flows
                                   (Unaudited)
                                 (In thousands)

                                                              Three Months Ended
                                                                        June 30,
                                                               2001       2000
                                                               ----       ----

Cash Flows from Operating Activities:
Net income (loss)                                             $(419)     $  51
Adjustments to reconcile net loss to net
cash used in operating activities:
     Depreciation and amortization:
       Fixed assets                                              27         28
       Software licenses and development costs                   22         71
Changes in assets and liabilities, net:
     Accounts receivable                                         49       (488)
     Other receivable                                           151       --
     Prepaid expenses and other current assets                  131         61
     Accounts payable                                           (26)        55
     Accrued expenses                                            49       (153)
     Deferred maintenance revenue                               (35)        (7)
     Other, net                                                   7         13
                                                              -----      -----

Net cash used in operating activities                           (44)      (369)
                                                              -----      -----

Cash Flows from Investing Activities:
Acquisition of fixed assets                                      (3)      (147)
Capitalization of software development costs and
   purchase of software licenses                                 (8)      --
                                                              -----      -----

Net cash used in investing activities                           (11)      (147)
                                                              -----      -----

Cash Flows from Financing Activities:
Principal payments on short-term borrowings                    (110)      --
Proceeds from issuance of common stock and warrants              92          8
                                                              -----      -----

Net cash used in financing activities                           (18)         8
                                                              -----      -----

Net decrease in cash and
     cash equivalents                                           (73)      (508)
Cash and cash equivalents at beginning
     of period                                                  103        815
                                                              -----      -----

Cash and cash equivalents at end
     of period                                                $  30      $ 307
                                                              =====      =====

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                  Page 5 of 21
<PAGE>

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            June 30, 2001 - Unaudited
                                 (In thousands)

Note 1:       Basis of Presentation and Financial Statement Information

        The accompanying consolidated financial statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission for interim financial statements.  Therefore, they do not include all
the  disclosures  which were  presented in the  Company's  annual report on Form
10-KSB.  These financial  statements do not include all disclosures  required by
generally  accepted  accounting  principles and  accordingly,  should be read in
conjunction  with the  consolidated  financial  statements and notes included as
part of the  Company's  latest  annual report on Form 10-KSB for the fiscal year
ended March 31, 2001.

         In the opinion of management,  the  consolidated  financial  statements
include  all  adjustments  (consisting  only of  normal  recurring  adjustments)
necessary to present  fairly the  consolidated  financial  position,  results of
operations  and cash flows for the interim  period.  The  results of  operations
presented are not  necessarily  indicative of the results to be expected for the
full year or for any other period.

         The report of Moss Adams LLP on the Company's fiscal 2001  consolidated
financial  statements  dated  June 8, 2001  included  an  explanatory  paragraph
regarding the Company's ability to continue as a going concern.  There can be no
assurance  that the Company  will not  continue to incur  significant  operating
losses or that  required  additional  financing  will be  available  to meet the
Company's  business  plans in fiscal 2002 and beyond.  The Company has  incurred
significant  losses for the last two fiscal years from  operations  and does not
believe that cash and cash  generated  from  operations  will be  sufficient  to
finance  operations through the second quarter of fiscal 2002 and beyond without
additional working capital.  The Company is exploring financing  alternatives to
supplement its cash position.  Potential sources of additional financing include
private   equity   financings,   mergers,   strategic   investments,   strategic
partnerships or various forms of debt financings.  During the quarter ended June
30,  2001,  the Company  executed a stock  purchase  agreement.  The Company has
recently  introduced  updated versions of its existing products and has plans to
continue developing  enhanced software products.  There can be no assurance that
the Company  will be able to execute  additional  forms of financing of that the
Company  will not incur  additional  losses until its  recently  introduced  and
existing products generate significant  revenue.  These events raise substantial
doubt  about  the  Company's  ability  to  continue  as  a  going  concern.  The
accompanying  financial  statements have been prepared assuming the Company will
continue  as a going  concern.  The  accompanying  financial  statements  do not
include  any   adjustments   that  might   result  from  the  outcome  of  these
uncertainties.

Note 2:       Earnings Per Share

         The Company has adopted Statement of Financial Accounting Standards No.
128 "Earnings per Share" (FAS 128).  Under FAS 128, the Company presents two EPS
amounts.  Basic EPS is calculated based on income or loss to common shareholders
and the  weighted-average  number  of shares  outstanding  during  the  reported
period.  Diluted EPS includes additional dilution from common stock equivalents,
such as stock  issuable  pursuant to the exercise of stock options and warrants.
Common  stock  equivalents  were not  included  in the  computation  of  diluted
earnings per share when the Company  reported a loss because to do so would have
been antidilutive for the periods presented.

         The  following is a  reconciliation  of the  computation  for basic and
diluted EPS:

                                                            Three Months Ended
                                                                June 30,
                                                           2001           2000
                                                           ----           ----

Net income (loss)                                        $   (419)      $     51
                                                         ========       ========

Weighted-average common shares
     outstanding (basic)                                   40,740         35,517

Weighted-average common stock equivalents:
     Stock options                                           --            1,560
     Warrants                                                --              334
                                                         --------       --------
Weighted-average common shares
     outstanding (diluted)                                 40,740         37,411
                                                         ========       ========

                                  Page 6 of 21
<PAGE>

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            June 30, 2001 - Unaudited
                                 (In thousands)

Note 3:       Comprehensive Income (Loss)

         The Company has adopted Statement of Financial Accounting Standards No.
130,  "Reporting  Comprehensive  Income." This Statement requires that all items
recognized under accounting standards as components of comprehensive earnings be
reported  in an  annual  financial  statement  that is  displayed  with the same
prominence as other annual  financial  statements.  This Statement also requires
that an entity classify items of other comprehensive earnings by their nature in
an annual financial statement.  The Company's total comprehensive  earnings were
as follows:

                                                   Three Months Ended June 30,

                                                        2001          2000
                                                        ----          ----

Net income (loss)                                  $     (419)      $       51
Other comprehensive gain                                   --               --
                                                   ----------       ----------
     Total comprehensive income (loss)             $     (419)      $       51
                                                   ===========      ==========

Note 4:       Statement of Cash Flows Information
                                                         Three Months Ended
                                                              June 30,
                                                      2001            2000
                                                      ----            ----
Supplemental Cash Flow Information:
Cash paid during the period for:
     Interest                                       $     --       $        8
     Income Taxes                                   $     --       $       --
Non-cash investing and financing activities:
     Common stock issued in exchange for
        note payable                                $     --       $       44

Note 5:         Balance Sheet Components
                                                                  June 30, 2001
Other Assets:
Software development costs                                         $      995
Software licenses                                                         979
                                                                   ----------
                                                                        1,974
Less accumulated amortization                                          (1,836)
                                                                   ----------
                                                                          138
Goodwill                                                                   85
Other                                                                      21
                                                                   ----------
                                                                   $      244
                                                                   ==========
Accrued Expenses:
Payroll and related costs                                          $      130
Taxes payable                                                              38
Interest payable                                                          102
Other                                                                      31
                                                                   ----------
                                                                   $      301
                                                                   ==========

                                  Page 7 of 21
<PAGE>

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            June 30, 2001 - Unaudited
                                 (In thousands)

Note 6:         Bank Borrowings and Long-Term Debt

         In January 2001,  the company  entered into an Agreement  with its bank
for the purchase of the Company's  receivables.  The agreement provides that the
bank will purchase with recourse up to $250 of the Company's  domestic  accounts
receivable.  The bank will advance the Company 80% of qualified receivables.  In
the event that the Company's customers do not pay on the invoices within 90 days
of invoice date,  the Company may be required to return the amounts  advanced to
the bank.

         In June 1999, the Company began a subordinated  debt/warrant financing.
The financing included  approximately $1,000 of three-year notes and the sale of
approximately  8,000  Warrants  at $0.01  per  Warrant.  The debt  bears  simple
interest of 10% and the Warrants  have a five-year  term with an exercise  price
per share of $0.125. This financing  transaction  consists of two closings.  The
first  closing  took  place on June 7,  1999.  The  Company  received  $768 cash
proceeds from this closing.  This included $711 of three-year notes and the sale
of approximately 5,700 Warrants at $0.01 per Warrant.  The second closing was to
have taken place on July 15, 1999. The closing was extended until  September 24,
1999 pending negotiation of a workout with the Creditors'  Committee through the
Credit  Managers'  Association  to  resolve  accounts  payable  issues  that was
satisfactory to the majority of the investors.  An agreement was reached and the
Company received  approximately $312 cash proceeds from the second closing.  The
Company  has used  part of the  proceeds  from the  financing  to  complete  the
Settlement  Agreement with its lender and to pay other accounts payable and used
the balance of the proceeds to help fund its operations.  The Company's CEO, the
Company's  Chairman of the Board,  an  affiliate  of a Company  director and two
Company 10% shareholders participated in the financing.

Note 7:         Capital Stock

         On March 26, 2001, we issued a Warrant Reduction Offer (the "Offer") to
investors who held warrants to purchase shares of our Common Stock  ("Warrants")
at an exercise price of $0.53 per share (the "$0.53 Warrants"). Under the Offer,
such  investors  were able to exercise the $0.53  Warrants at a reduced price of
either  $0.13 per share or $0.115  per share.  Investors  who  exercised  at the
$0.115 price were  prohibited from selling the shares acquired from the exercise
for 60 days  commencing  from the exercise date.  Investors who exercised at the
$0.13 price had no restrictions on the sale of the underlying  shares. The Offer
expired on Friday,  April 6, 2001.  During the first  quarter of fiscal 2002, 45
Warrants were exercised at $0.115 per share, raising $5. Affiliates of a Company
director and one 10% shareholder participated in the Offer.


         In  June  2001,  the  Company  began  a  private  placement  of  equity
securities.  The Company  completed  the private  placement  of 1,471  shares of
Common Stock on July 13, 2001,  with total  proceeds to the Company of $125. The
shares of Common Stock are  unregistered.  The Company will file a  registration
statement with the Securities and Exchange  Commission to become effective on or
before November 11, 2001 pursuant to the terms of the stock purchase  agreement.
Affiliates of a director participated in the private placement.

         The Company  issued 56 Shares of Common Stock valued at $10 in exchange
for services.

         Subsequent  to  quarter  end,  on July 31,  2001,  we  issued a Warrant
Reduction  Offer (the "Offer") to investors who held warrants to purchase shares
of our Common Stock  ("Warrants")  at an exercise  price of $0.37 per share (the
"$0.37  Warrants").  Under the Offer,  such  investors were able to exercise the
$0.37  Warrants  at a reduced  price of $0.055 per share.  The Offer  expired on
August 6, 2001. 270 Warrants were exercised at $0.055 per share, raising $15.

Note 8:         Commitments and Contingencies

         As with  other  companies  in  industries  similar  to  Silicon  Valley
Research,  Inc.,  the  Company  is  subject  to the risk of  adverse  claims and
litigation  on a variety of  matters,  including  infringement  of  intellectual
property,  intentional and/or negligent  misrepresentation of material facts and
breach of  fiduciary  duties.  In March 2001,  the Company  filed suit against a
customer to recover  approximately  $220 for amounts  unpaid for a license sale,
which is included in accounts  receivable  at June 30,  2001.  The  customer has
counterclaimed  the following  causes of action:  breach of contract,  breach of
warranty and negligent misrepresentation. The

                                  Page 8 of 21
<PAGE>

                 SILICON VALLEY RESEARCH, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                            June 30, 2001 - Unaudited
                                 (In thousands)

Company  believes  the counter  claim is without  merit.  The  Company  plans to
vigorously pursue its cause of action.  The matter is currently in the discovery
stage and the outcome is not known.

Note 9:         Subsequent Event

         The Company filed a complaint in the United States  District  Court for
the  Northern   District  of  California  on  August  10,  2001  against  Avant!
Corporation  and  certain  of its  employees  for unfair  competition,  tortious
interference,  false  advertising,  receipt  and  concealing  of  stolen  goods,
conspiracy and violations of federal racketeering laws. This civil action arises
out  of  Avant!'s  theft  of  computer  code  and  trade  secrets  from  Cadence
Corporation and use of those stolen products to compete with the Company.

         Avant!  Corporation recently was found guilty of theft of trade secrets
and conspiracy to steal and use the trade secrets of Cadence  Corporation during
the period of 1991 through  1998,  and of having  engaged in fraud and deceit in
the offer and sale of a security after entering a plea of no contest  thereto on
May 16, 2001. A restitution  award of approximately  $195 million was awarded to
Cadence Corporation in the criminal case, and Cadence is awaiting the lifting of
a stay in its civil suit against Avant! Corporation.

         The Company has  determined it necessary to undertake this legal action
in an attempt to recoup damages caused by Avant!'s  conduct,  including  damages
resulting  from sales of SVR place and route  software  lost  directly to Avant!
Corporation.  Avant!  Corporation  sold place and route  software that contained
Cadence  Corporation's  stolen  computer  code and  trade  secrets  head to head
against  the  Company's  software,  and this  unfair  advantage  allowed  Avant!
Corporation  to acquire a significant  amount of the Company's  sales and market
share.

         SVR has retained David H. Donaldson, Jr. and Peter Kennedy of the Texas
law firm of George & Donaldson,  LLP and  California  counsel  Craig  Needham to
represent it in this matter on a contingency fee arrangement.

         Management  believes  that the ultimate  resolution of the disputes and
litigation  matters  discussed above will not have a material  adverse impact on
the Company's financial position or results of operations.

         A  copy  of  the   complaint  can  be  found  on  the  SVR  website  at
www.svri.com.

Note 10:        Recent Accounting Pronouncements

         In  June  2001,  the  Financial   Accounting   Standards  Board  issued
Statements of Financial Accounting Standards No. 141, Business Combinations, and
No. 142,  Goodwill  and Other  Intangible  Assets,  effective  for fiscal  years
beginning after December 15, 2001. Under the new rules,  goodwill and intangible
assets deemed to have  indefinite  lives will no longer be amortized but will be
subject to annual  impairment  tests in accordance  with the  Statements.  Other
intangible  assets will continue to be amortized  over their useful  lives.  The
Company will apply the new rules on accounting for goodwill and other intangible
assets  beginning in the first  quarter of fiscal 2003.  The Company has not yet
determined  the effect  resulting from the  application  of the  nonamortization
provisions  of the  Statement on the  earnings.  During  2002,  the Company will
perform the first of the required  impairment  tests of goodwill and  indefinite
lived intangible  assets as of April 1, 2002 and has not yet determined what the
effect of these  tests will be on the  earnings  and  financial  position of the
Company.

         In December  1999,  the SEC issued  Staff  Accounting  Bulletin No. 101
("SAB 101"),  "Revenue Recognition in Financial  Statements." SAB 101 summarized
certain of the SEC's views in applying generally accepted accounting  principles
to revenue recognition in financial  statements.  SAB 101 was adopted during the
year  ended  March 31,  2001.  The  adoption  of SAB 101 did not have a material
effect on the Company's financial position or results of operations.

                                  Page 9 of 21
<PAGE>

ITEM 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 (In thousands)

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  includes  a number  of  forward-looking  statements,  which  reflect
Silicon  Valley  Research,  Inc.'s  ("the  Company" or "SVR")  current view with
respect to future  events and  financial  performance,  including,  for example,
statements  concerning  releases  of new  products  and  enhancements,  expected
revenue growth and international  sales.  These  forward-looking  statements are
subject to certain risks and  uncertainties,  including  those  discussed in the
Other Factors Affecting Future Results section of this Item 2, elsewhere in this
Form 10-QSB and as set forth in our form 10-KSB on file with the SEC, that could
cause  actual  results to differ  materially  from  historical  results or those
anticipated.  Some of the examples of forward-looking  statements in this report
include a  possible  source of cash is the  potential  exercise  of  outstanding
warrants,  our plans to release product  upgrades and enhancements and our plans
to  increase  international  sales.  In this  report,  the words  "anticipates,"
"believes,"  "expects,"  "intends,"  "future,"  "may"  and  similar  expressions
identify  forward-looking  statements.  Readers are cautioned not to place undue
reliance on these  forward-looking  statements,  which speak only as of the date
hereof.  We  undertake  no  obligation  to  publicly  release the results of any
revisions  to these  forward-looking  statements  which  may be made to  reflect
events or  circumstances  occurring  subsequent to the filing of the Form 10-QSB
with the Securities and Exchange Commission.

RESULTS OF OPERATIONS

REVENUE

         Revenue for the first quarter of fiscal year 2002, which ended June 30,
2001,  was $533,  a  decrease  from $769 in the  first  quarter a year ago.  The
decrease  in license  revenue  from the same  period in the prior year is due to
several  factors,  including  a slowdown  in the  Electronic  Design  Automation
Industry and the economy in general,  as well as a change in our sales strategy.
Late in the prior fiscal year, we completed the  implementation  of our internet
software delivery system.  Our tools are offered through e*ECAD's Web service on
a pay-per-use  basis.  Users can access  e*ECAD's  broad variety of software and
download selected tools to their computers. Our customers download,  install and
run the tools they need and are charged for the actual usage time,  which can be
billed in increments of .01 of a minute.  We released our Gards product  on-line
late in the third  quarter of the prior  fiscal  year in December  2000.  Our SC
product was released in the fourth quarter in January 2001 and our Linux version
of Gards was released at the end of this quarter, in June 2001.  Maintenance and
services revenue has increased in the first quarter of fiscal year 2002 to $402,
an  increase  of 118%  over the same  period in the prior  year.  This  increase
reflects  our  continued  emphasis  on the  services  market in order to provide
customers with a service-driven  integrated  circuit design solution.  We had no
international  sales in the first  quarters  of fiscal  2002 and 2001.  Prior to
fiscal  2000,  international  sales  were  made  primarily  in Japan  and  other
countries in the Far East.  Our plans for fiscal 2002 include an aggressive  new
product plan, including new releases of significant enhancements for each of our
primary products,  as well as plans to increase  international  sales.  However,
there can be no  assurance  that these new  products  and  enhancements  will be
released on a timely basis, if at all, or will gain market acceptance. We intend
to continue to focus on the services  market going  forward.  See "Other Factors
Affecting Future Results-New  Products and Rapid  Technological  Change; Risk of
Product Defects".

         A  substantial  portion of our  revenues in each  quarter  results from
shipments  during  the last month of that  quarter,  and for that  reason  among
others,  our  revenues are subject to  significant  quarterly  fluctuations.  If
revenue levels are below  expectations,  operating results may be materially and
adversely affected. In addition,  our quarterly and annual results may fluctuate
as a result of many factors, including but not limited to the size and timing of
software license fees and service contracts,  timing of co-development  projects
with customers,  timing of operating  expenditures,  increased competition,  new
product  announcements  and releases by us and our competitors,  gain or loss of
significant  customers or distributors,  expense levels,  renewal of maintenance
contracts, pricing changes by us or our competitors,  personnel changes, foreign
currency  exchange  rates,  and  economic   conditions   generally  and  in  the
electronics industry specifically.

         Our expense levels are based, in part, on our expectations as to future
revenue levels, which are difficult to predict.

                                  Page 10 of 21
<PAGE>
COST OF REVENUE

         Cost of license  fees and other for the first  quarter  of fiscal  year
2002 was $17 as compared  to $66 in the first  quarter of fiscal  2001.  Cost of
sales of  license  fees and other is  primarily  the  amortization  of  software
development costs and is not a function of revenue.

         Cost of  maintenance  and services for the first quarter of fiscal year
2002 was $191  compared  to $113 in the first  quarter of fiscal  2001.  Cost of
maintenance  and  services  primarily  includes  the  cost of  providing  design
services.

ENGINEERING, RESEARCH AND DEVELOPMENT EXPENSES

         Engineering, research and development expenses for the first quarter of
fiscal  year 2002 were $212  compared  to $160 in the first  quarter a year ago.
Comparing the first quarter of fiscal 2002 and the first quarter of fiscal 2001,
engineering,  research  and  development  expenses  were  40% and  21% of  total
revenue,  respectively.  The increase in  engineering,  research and development
expenses  is  due  to our  continuing  emphasis  on  new  product  research  and
development.

SELLING AND MARKETING EXPENSES

         Selling and  marketing  expenses  for the first  quarter of fiscal year
2002  increased to $296 from $205 in the first  quarter a year ago. In the first
quarter  of  fiscal  2002 and the first  quarter  of fiscal  2001,  selling  and
marketing expenses were 56% and 27% of total revenue, respectively. The increase
in selling and marketing  expenses is due to increased costs associated with our
participation in an annual trade show, which takes place in June, which makes up
the bulk of selling and marketing expenses.

GENERAL AND ADMINISTRATIVE EXPENSES

         General and  administrative  expenses  increased  to $213 for the first
quarter of fiscal  year 2002 from $155 in the first  quarter a year ago.  In the
first quarter of fiscal 2002 and the first  quarter of fiscal 2001,  general and
administrative  expenses were 40% and 20% of total  revenue,  respectively.  The
increase  is due to an  increase  in  personnel,  bank  charges  related  to the
accounts receivable financing and investor relations.

Other income (expense)

         Other  income for the first  three  months of fiscal year 2002 and 2001
includes interest income and interest expense on subordinated debt.

LIQUIDITY AND CAPITAL RESOURCES

         Since  inception,  we have financed our  operations  primarily  through
sales  of  equity  securities  and  to a  lesser  extent,  cash  generated  from
operations.  During  the  three  months  ended  June  30,  2001,  cash  and cash
equivalents  decreased $73 from $103 to $30.  This  decrease  resulted from cash
used in financing activities of $18 less cash used by operations of $44 and less
$11 of cash used for investing  activities.  We received  approximately $92 from
the exercise of outstanding warrants. A possible future source of cash for us is
the  potential  exercise  of  outstanding  warrants  if our stock  price were to
increase.

         We reported an operating  loss for the three months ended June 30, 2001
of $419.  At June 30,  2001,  we had an  accumulated  deficit  of  $46,883.  The
achievement  of  profitability   is  primarily   dependent  upon  the  continued
development and commercial acceptance of our products, the successful management
of the business and  management's  ability to  strategically  focus the Company.
There can be no assurance that profitable operations will occur. In addition, we
are  experiencing  negative  cash  flow  from  operations  and may  continue  to
experience  negative cash flow from  operations for a portion of fiscal 2002 and
potentially thereafter.

         Our primary  unused sources of funds at June 30, 2001 consisted of cash
and cash equivalents of $30.

         Our operations have required substantial cash in the past; for example,
$44 during the first three months of fiscal 2002.

                                  Page 11 of 21
<PAGE>

         In January  2001,  we entered into an  Agreement  with our bank for the
purchase of our receivables.  The agreement provides that the bank will purchase
with  recourse up to $250 of our  domestic  accounts  receivable.  The bank will
advance us 80% of qualified receivables.  In the event that our customers do not
pay on the invoices within 90 days of invoice date, we may be required to return
the amount  advanced  to the bank.  It is also  possible  that we could  require
additional financing to fund future operations.

         On March 26, 2001, we issued a Warrant Reduction Offer (the "Offer") to
investors who held warrants to purchase shares of our Common Stock  ("Warrants")
at an exercise price of $0.53 per share (the "$0.53 Warrants"). Under the Offer,
such  investors  were able to exercise the $0.53  Warrants at a reduced price of
either  $0.13 per share or $0.115  per share.  Investors  who  exercised  at the
$0.115 price were  prohibited from selling the shares acquired from the exercise
for 60 days  commencing  from the exercise date.  Investors who exercised at the
$0.13 price had no restrictions on the sale of the underlying  shares. The Offer
expired on Friday,  April 6, 2001.  During the first  quarter of fiscal 2002, 45
Warrants were exercised at $0.115 per share, raising $5. Affiliates of a Company
director and one 10% shareholder participated in the Offer.

         In  June  2001,  the  Company  began  a  private  placement  of  equity
securities.

         On July 13, 2001,  we completed a private  placement of 1,471 shares of
Common Stock,  with proceeds to us of $125,  $75 of which was received  prior to
June 30,  2001.  The  shares of Common  Stock are  unregistered.  We will file a
registration  statement with the  Securities  and Exchange  Commission to become
effective  on or before  November  11,  2001  pursuant to the terms of the stock
purchase  agreement.  Affiliates  of a  director  participated  in  the  private
placement.

         Subsequent  to  quarter  end on July 31,  2001,  we  issued  a  Warrant
Reduction  Offer (the "Offer") to investors who held warrants to purchase shares
of our Common Stock  ("Warrants")  at an exercise  price of $0.37 per share (the
"$0.37  Warrants").  Under the Offer,  such  investors were able to exercise the
$0.37  Warrants  at a reduced  price of $0.055 per share.  The Offer  expired on
August 6, 2001. 270 Warrants were exercised at $0.055 per share, raising $15.

         We believe that cash and cash  generated  from  operations  will not be
sufficient to finance  operations  through the second quarter of fiscal 2002 and
beyond.  Management is exploring  financing  alternatives to supplement our cash
position.  Potential  sources of additional  financing  include  private  equity
financings,  mergers,  strategic investments,  strategic partnerships or various
forms of debt financings. However, our Common Stock was delisted from trading on
the  Nasdaq   National   Market  in   November   1998  and  now  trades  in  the
over-the-counter  market. Our ability to obtain additional financing through the
issuance of our Common Stock or securities  convertible  into Common Stock could
be  adversely  affected.  See  "Delisting  from Nasdaq;  Disclosure  Relating to
Low-Priced Stock".

         We may  issue  one or more  series  of  Preferred  Stock  with  rights,
preferences,  or  privileges  senior to those of the  Common  Stock.  We have no
commitments or  arrangements  to obtain any  additional  funding and there is no
assurance  that the amount of capital  required  will be available on acceptable
terms, if at all. However, because our Common Stock was delisted from trading on
the  NASDAQ  national   market  in  November,   1998,  and  now  trades  in  the
over-the-counter  market,  our  ability  to  sell  Common  Stock  or  securities
convertible  into Common Stock may be adversely  affected.  See "Delisting  From
NASDAQ;  Disclosure  Relating to Low-Priced  Stock" below for possible effect of
current common stock trading on future issuances.

         The  unavailability  or timing of any financing  could prevent or delay
the  continued  development  and  marketing  of SVR products  and  services.  In
addition,  substantial curtailment of our operations may be required which could
result in bankruptcy.

OTHER FACTORS AFFECTING FUTURE RESULTS

Recent and Expected Losses;  Accumulated Deficit. We incurred a net loss of $419
for the three  months  ended  June 30,  2001 and had an  accumulated  deficit of
$46,883 as of June 30, 2001. We may incur future  losses.  There is no assurance
that we will generate  positive cash flow from our operations to fund our growth
or that we will sustain  profitability  in any future  period.  To the extent we
incur losses or grow in the future,  our operating and investing  activities may
use cash and,  consequently,  such  losses or growth  will  require us to obtain
additional sources of financing in the future.

                                  Page 12 of 21
<PAGE>

Need for Future Financing.  As described above, under Management  Discussion and
Analysis-Liquidity  and Capital  Resources,  we believe cash and cash  generated
from operations may not be sufficient to finance operations through fiscal 2002.
Management is exploring  financing  alternatives to supplement our cash position
to service our current debt and any negative  cash flow from  operations.  There
can be no  assurance  that we will be able to raise such  financing  or that any
such financing we are able to conduct will be on attractive terms.

Going  Concern   Assumptions.   Our  independent   accountants'  report  on  our
consolidated  financial  statements as of and for the years ended March 31, 2001
and 2000  contained an  explanatory  paragraph  indicating  that our  historical
operating losses and limited capital resources raise substantial doubt about our
ability to continue as a going concern.  If we are unable to generate sufficient
cash from operations or if necessary,  raise  sufficient funds to cover the cost
of operations,  it is likely that any independent  accountant's report on future
financial statements will include a similar explanatory paragraph.

Change in Business  Model.  During the second quarter of fiscal 2001, we changed
our sales strategy to a time-based  internet  licensing  model.  We released our
Gards product on-line late in the third quarter of fiscal 2001 in December 2000.
Our SC product was released in the fourth  quarter in January  2001. We released
our Linux  version  of Gards in the first  quarter  of fiscal  year 2002 in June
2001.  There can be no assurance  that this new  time-based  internet  licensing
model will be successful.

Dependence  on Certain  Customers.  A small  number of  customers  account for a
significant  percentage  of our total  revenue.  There can be no assurance  that
sales to  these  entities,  individually  or as a group,  will  reach or  exceed
historical levels in any future period. Any substantial decrease in sales to one
or more of these customers could have a material adverse effect on our business,
operating results or financial condition.

         A small number of customers account for a significant percentage of SVR
total  revenue.  For the  first  three  months of fiscal  2002,  four  customers
accounted for 67% of our total revenue. In the first quarter of fiscal 2001, two
customers accounted for 88% of our revenue. There can be no assurance that sales
to these entities,  individually or as a group,  will reach or exceed historical
levels in any future period. Any substantial decrease in sales to one or more of
these customers could have a material adverse effect on our business,  operating
results or financial condition.

New  Products  and Rapid  Technological  Change;  Risk of Product  Defects.  The
Electronic Design Automation ("EDA") industry is characterized by the following:

o        extremely rapid technological change

o        frequent new product introductions and enhancements

o        evolving industry standards

o        rapidly changing customer requirements

         The   development  of  more  complex   integrated   circuits  with  new
technologies  will require more  sophisticated  design tools. The success of our
future  operations  partly depends upon our ability to enhance current  products
and to develop and introduce new products on a timely and cost-effective  basis.
Our products and services  must keep pace with  technological  developments  and
evolving  industry  standards  and   methodologies,   as  well  as  address  the
increasingly  sophisticated needs of our customers.  During fiscal 2002, we will
have an aggressive new product release and current product update program,  upon
which expected revenue increases are partially based. It is possible that in the
future,  we  may  experience  delays  in new  product  development  and  product
enhancements.  We have experienced similar delays in the past. Such delays would
likely  decrease  expected  fiscal 2002 revenues,  which could cause us to incur
losses and utilize our available cash or even run out of cash.

         In fiscal  2001,  we announced  new products  offered on the e*ECAD Web
service. However, there is no guarantee that:

o        these new products will gain market acceptance

o        we will be successful in developing and marketing product enhancements

o        we will be successful in developing  other new products that respond to
         technological change, evolving industry standards and changing customer
         requirements

                                  Page 13 of 21
<PAGE>

o        we will not  experience  difficulties  that could  delay or prevent the
         successful development, introduction and marketing of these products or
         product enhancements

o        new  products  and  product   enhancements  will  adequately  meet  the
         requirements of the  marketplace and achieve any significant  degree of
         market acceptance

         All of our present  products operate in the Unix and/or Linux operating
systems  and we intend for all future  products to operate in the Unix and Linux
operating systems.  In the event that another operating system,  such as Windows
NT, were to achieve broad  acceptance in the EDA industry,  we would be required
to port our products.  This would be costly and time  consuming and could have a
material  adverse  effect  on  our  business,  operating  results  or  financial
condition.  If we fail  to  develop  and  introduce  new  products  and  product
enhancements in a timely and  cost-effective  manner, for technological or other
reasons,  it could also have  material  and  adverse  effects  on our  business,
operating  results and financial  condition.  Introducing or even announcing new
products by us or our  competitors,  including  new  technologies  or changes in
industry  standards  or customer  requirements,  could render some or all of our
existing products obsolete or unmarketable.  Furthermore,  customers might defer
purchases  due to the  introduction  or  announcement,  which  would also have a
material  adverse  effect  on  our  business,  operating  results  or  financial
condition.

         Complex software products,  such as those we offer, can contain defects
or even fail when  introduced  or  released.  We have,  in the past,  discovered
defects in certain of our products.  We may experience delays or lost revenue in
connection with repairs and corrections of defects found in the future. Although
to date we have not experienced material adverse effects resulting from defects,
it is possible in the future that despite  testing,  errors will go undiscovered
in new  products or releases  until after  shipment.  These errors may result in
loss of market share or failure to achieve  market  acceptance.  If this were to
occur,  it could have a material  adverse  effect upon our  business,  operating
results or financial condition.

Delisting From NASDAQ; Disclosure Relating to Low-Priced Stock. Our common stock
was delisted from trading on the NASDAQ  National  Market November 16, 1998. Our
common stock  immediately  began trading on the OTC Bulletin Board. As a result,
our ability to obtain additional  financing through the issuance of common stock
or securities convertible into common stock may be adversely affected. Investors
might find that disposing of our common stock is more difficult than is has been
in the past.  The trading price of our common stock is currently less than $5.00
per share.  Because the common  stock falls into the  category  defined as penny
stock,  trading  in the common  stock is  currently  subject  to  certain  rules
promulgated  under the Exchange  Act,  which  require  additional  disclosure by
broker-dealers.  These rules  require us, in advance of trading,  to provide you
with disclosure  schedules,  which explain the penny stock market and associated
risks.  The rules impose various sales practice  requirements on  broker-dealers
who  sell  penny  stock.   Broker-dealers   engaging  in  some  types  of  these
transactions  must make a special  suitability  determination  and  obtain  your
written  consent  prior  to  sale.   This   additional   burden  may  discourage
broker-dealers from actively  effectuating  common stock transactions,  which in
turn could have the adverse effect of severely limiting the marketability of our
common  stock.   Therefore,   the  ability  of  Silicon  Valley  Research,  Inc.
shareholders  to resell  their  stock  would be  limited.  In turn,  this  could
adversely effect our ability to obtain future equity financing.

Possible  Volatility  of Stock  Price.  The market price of our common stock has
been volatile.  The following  events could cause the market price of our common
stock to fluctuate substantially:

o        future  announcements  concerning  our  competitors  or  its  quarterly
         variations in operating results

o        the introduction of technological innovations, new products, or changes
         in product pricing policies

o        proprietary rights or other litigation, or

o        changes in earnings estimates by analysts or other factors

         The stock market has from time to time  experienced  significant  price
and volume  fluctuations that have  particularly  affected the market prices for
the common stocks of technology  companies like ours.  These  fluctuations  have
often been unrelated to the operating performance of particular companies.

         In the past,  shareholder  class action  suits have been filed  against
companies  following  periods of volatility  of stock price.  Litigation of this
nature could occur in our future.  Litigation often diverts management attention
and resources and is costly to the company.  If we were placed in this position,
it could have a material adverse effect on our business, financial condition and
operation  results.  Significant  liabilities  are  always  possible  effects of
litigation.

                                  Page 14 of 21
<PAGE>

Potential  Fluctuations in Quarterly  Operating  Results.  Numerous  factors may
materially and unpredictably affect our operating results, including:

o        uncertainties of the size and timing of software license fees

o        timing of co-development projects with customers

o        timing of operating expenditures

o        increased competition

o        new product announcements and releases by us and our competitors

o        gain or loss of significant customers or distributors

o        expense levels

o        renewal of maintenance contracts

o        pricing changes by us or our competitors

o        personnel changes

o        foreign currency exchange rates

o        economic   conditions   generally  and  in  the  electronics   industry
         specifically

         Any unfavorable  change in these or other factors could have a material
adverse effect on our operating  results for a particular  quarter.  Many of our
customers  order on an as-needed basis and often delay delivery of firm purchase
orders until their project  commencement  dates are determined.  As a result, we
operate with no significant backlog. Therefore,  quarterly revenue and operating
results  will  depend on the  volume and  timing of orders  received  during the
quarter, which are difficult to forecast accurately. Historically, we have often
recognized a  substantial  portion of license  revenues in the last month of the
quarter,  with these revenues  frequently  concentrated in the last two weeks of
the  quarter.  Operating  results  would  be  disproportionately  affected  by a
reduction in revenue because only a small portion of expenses vary with revenue.
Operating  results in any  period  should not be  considered  indicative  of the
results  to be  expected  for any future  period.  Our  revenues  may or may not
increase.

Lengthy Sales Cycle. The licensing and sale of our software  products  generally
involve a significant commitment of capital from prospective  customers.  Delays
are frequently associated with large capital expenditures and lengthy acceptance
procedures.  For these and other reasons,  the sales cycle  associated  with the
licensing  of our  products  is  typically  lengthy  and  subject to a number of
significant risks over which we have little or no control. Because the timing of
customer orders is hard to predict,  we believe that quarterly operating results
are  likely to vary  significantly  in the  future.  Actual  results  could vary
materially as a result of a variety of factors, including, without limitation:

o        the high average selling price and long sales cycle for our products

o        the relatively small number of orders per quarter

o        dependence on sales to a limited number of large customers

o        timing of receipt of orders

o        successful product introduction

o        acceptance of our products and increased competition

Dependence Upon Semiconductor and Electronics  Industries;  General Economic and
Market  Conditions.   Silicon  Valley  Research,  Inc.  is  dependent  upon  the
semiconductor  and, more generally,  the electronics  industries.  Each of these
industries is characterized by rapid  technological  change,  short product life
cycles,  fluctuations  in  manufacturing  capacity  and  pricing.  Each of these
industries  is highly  volatile  and has  periodically  experienced  significant
downturns.  Often in connection with, or in anticipation of, declines in general
economic conditions,  the number of new integrated circuit design projects often
decreases. Customer purchases of new licenses from us are largely dependent upon
the commencement of new design  projects.  Factors  negatively  affecting any of
these industries could have a material adverse effect on our business, operating
results or financial  condition.  Our business,  operating results and financial
condition  may in the future  reflect  substantial  fluctuations  from period to
period  due  to  patterns  and  general   economic   conditions  in  either  the
semiconductor or electronics industry.

                                  Page 15 of 21
<PAGE>

International  Sales.  International  sales,  primarily  in  Japan  and  Taiwan,
accounted  for  approximately  3% and 5% of the total revenue in fiscal 2001 and
2000,  respectively.   Declining  revenues  from  international  sales  resulted
primarily  from closure of our Tokyo office in December  1998, and Taiwan office
in March 1999 brought about,  in part, by the reduction in capital  expenditures
by semiconductor  manufacturers,  particularly in Asia and increased competition
in the EDA software  market.  We plan for  international  sales to account for a
portion  of revenue  during  fiscal  2002,  as had been the case prior to fiscal
2000. However, this revenue involves a number of inherent risks, including:

o        economic downturn in the electronics industry in Asia

o        traditionally slower adoption of our products internationally

o        general strikes or other disruptions in working conditions

o        generally longer receivables collection periods

o        unexpected  changes in or  impositions  of  legislative  or  regulatory
         requirements

o        reduced protection for intellectual property rights in some countries

o        potentially adverse taxes

o        delays  resulting  from  difficulty  in obtaining  export  licenses for
         certain technology

o        other trade barriers

         The factors  listed above may have a material  adverse effect on future
international sales and, consequently, on operating results.

Competition.  The EDA software  market in which Silicon  Valley  Research,  Inc.
competes is intensely  competitive and subject to rapid technological change. We
currently face competition from EDA vendors,  including Cadence, which currently
holds the dominant share of the market for integrated  circuit  physical  design
software,  Avant!  and Synopsys.  These EDA vendors have  significantly  greater
financial,  technical and marketing  resources,  greater name  recognition and a
larger  installed  customer base than us. These companies also have  established
relationships  with  current  and  potential  customers  of ours and can  devote
substantial  resources aimed at preventing us from enhancing  relationships with
existing customers or establishing  relationships with potential  customers.  We
believe that competitive factors in the EDA software market include:

-        product performance
-        price
-        support of industry standards
-        ease of use
-        delivery schedule
-        product enhancement
-        customer technical support and service

         Competition   from  other  EDA  companies  that  choose  to  enter  the
integrated circuit physical design market could present particularly  formidable
competition  due to their large  installed  customer  base and their  ability to
offer a  complete  integrated  circuit  design  solution.  We expect  additional
competition from other established and emerging companies.  In addition, the EDA
industry  has become  increasingly  concentrated  in recent years as a result of
consolidations,   acquisitions  and  strategic  alliances.  Accordingly,  it  is
possible that new  competitors or alliances among  competitors  could emerge and
rapidly acquire significant market share. There can be no assurance that we will
be able to compete  successfully  against current and future competitors or that
competitive pressures faced by us will not have a material adverse effect on our
business, operating results and financial condition.

Dependence on Key Personnel.  Our success depends to a significant extent upon a
number of key technical and management employees,  in particular,  upon James O.
Benouis,  our President and Chief  Executive  Officer.  We do not currently have
"key man" life insurance on Mr. Benouis.  The loss of services of Mr. Benouis or
any of our other key employees  could have a material  adverse effect on us. Our
success  will  depend  in  large  part on our  ability  to  attract  and  retain
highly-skilled technical, managerial, sales and marketing personnel. Competition
for  such  personnel  is  intense.  There  can be no  assurance  that we will be
successful  in retaining  our key  technical  and  management  personnel  and in
attracting and retaining the personnel we require to grow.

                                  Page 16 of 21
<PAGE>

Proprietary  Rights.  We rely on  contract,  trade secret and  copyright  law to
protect our technology. Competitors may develop similar or superior technologies
or duplicate SVR technology.  We generally enter into confidentiality or license
agreements with our employees,  distributors and customers,  and limit access to
and  distribution  of  SVR  software,   documentation   and  other   proprietary
information. Despite these precautions, it is possible for a third party to copy
or otherwise obtain and use SVR products or technology without authorization, or
to develop similar technology  independently.  In addition,  effective copyright
and trade protection may be unavailable or limited in certain foreign countries.

         There has been substantial  industry  litigation  regarding patents and
other  intellectual  property  rights  involving  technology  companies.  In the
future,  litigation  may be  necessary  to protect and enforce SVR  intellectual
property  rights,  to defend us against  claimed  infringement  of the rights of
others and to  determine  the scope and  validity of the  proprietary  rights of
others.  Any such  litigation  could be  costly  and could  divert  management's
attention,  which could have a material adverse effect on our business,  results
of  operations  or  financial  condition   regardless  of  the  outcome  of  the
litigation.  In addition, third parties making claims against us with respect to
intellectual property infringement may block our ability to sell products in the
United States and abroad,  and could result in an award of substantial  damages.
In the event of a claim of infringement,  we and our customers could be required
to obtain one or more  licenses  from third  parties.  There can be no assurance
that either us or our  customers  could  obtain  necessary  licenses  from third
parties at a reasonable cost or at all.

Effect of Certain Charter Projections; Blank Check Preferred Stock. Our Board of
Directors has the  authority to issue up to 1,000 shares of preferred  stock and
to  determine  the price,  rights,  preferences,  privileges  and  restrictions,
including voting rights, without any further vote or action by shareholders. The
rights of the  holders  of the  common  stock  will be  subject  to,  and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the  future.  The  issuance of  preferred  stock,  while  providing
desirable  flexibility  in  connection  with  possible  acquisitions  and  other
corporate  purposes,  could  have the effect of making it more  difficult  for a
third party to acquire a majority of our outstanding voting stock.

Inflation. To date, inflation has not had a significant impact on the results of
our operations.

Recent  Accounting  Pronouncements.  In  June  2001,  the  Financial  Accounting
Standards  Board issued  Statements of Financial  Accounting  Standards No. 141,
Business  Combinations,  and No.  142,  Goodwill  and Other  Intangible  Assets,
effective  for fiscal years  beginning  after  December 15, 2001.  Under the new
rules,  goodwill and intangible  assets deemed to have indefinite  lives will no
longer be amortized but will be subject to annual impairment tests in accordance
with the Statements.  Other intangible assets will continue to be amortized over
their  useful  lives.  The Company  will apply the new rules on  accounting  for
goodwill and other  intangible  assets  beginning in the first quarter of fiscal
2003.  The  Company  has  not yet  determined  the  effect  resulting  from  the
application of the nonamortization  provisions of the Statement on the earnings.
During 2002, the Company will perform the first of the required impairment tests
of goodwill and indefinite lived  intangible  assets as of April 1, 2002 and has
not yet  determined  what the effect of these tests will be on the  earnings and
financial position of the Company.

         In December  1999,  the SEC issued  Staff  Accounting  Bulletin No. 101
("SAB 101"),  Revenue  Recognition in Financial  Statements." SAB 101 summarizes
certain of the SEC's views in applying generally accepted accounting  principles
to revenue recognition in financial  statements.  SAB 101 was adopted during the
year  ended  March 31,  2001.  The  adoption  of SAB 101 did not have a material
effect on the Company's financial position or results of operations.

ITEM 3.             Quantitative and Qualitative Disclosure about market risk

Not Applicable

                                  Page 17 of 21
<PAGE>

                           PART II. OTHER INFORMATION

Item 1.           Legal Proceedings:

                  As with  other  companies  in  industries  similar  to Silicon
                  Valley  Research,  Inc., The Company is subject to the risk of
                  adverse  claims  and  litigation  on  a  variety  of  matters,
                  including infringement of intellectual  property,  intentional
                  and/or  negligent  misrepresentation  of  material  facts  and
                  breach of fiduciary duties.

                  In March 2001,  the Company  filed suit  against a customer to
                  recover  approximately  $220,000  for  amounts  unpaid  for  a
                  license sale, which is included in accounts receivable at June
                  30, 2001. The customer has counterclaimed the following causes
                  of  action:  breach  of  contract,   breach  of  warranty  and
                  negligent misrepresentation.  The Company believes the counter
                  claim is without merit. The Company plans to vigorously pursue
                  its cause of action.  The matter is currently in the discovery
                  stage and the outcome is not known.

                  The Company  filed a complaint in the United  States  District
                  Court for the Northern  District of  California  on August 10,
                  2001 against Avant!  Corporation  and certain of its employees
                  for   unfair   competition,   tortious   interference,   false
                  advertising,   receipt  and   concealing   of  stolen   goods,
                  conspiracy and violations of federal  racketeering  laws. This
                  civil action arises out of Avant!'s theft of computer code and
                  trade secrets from Cadence Corporation and use of those stolen
                  products to compete with the Company.

                  Avant! Corporation recently was found guilty of theft of trade
                  secrets and  conspiracy  to steal and use the trade secrets of
                  Cadence  Corporation  during the period of 1991 through  1998,
                  and of having  engaged  in fraud  and  deceit in the offer and
                  sale of a security after entering a plea of no contest thereto
                  on May 16, 2001. A  restitution  award of  approximately  $195
                  million was  awarded to Cadence  Corporation  in the  criminal
                  case,  and  Cadence is  awaiting  the lifting of a stay in its
                  civil suit against Avant! Corporation.

                  The Company has  determined  it necessary  to  undertake  this
                  legal  action  in an  attempt  to  recoup  damages  caused  by
                  Avant!'s  conduct,  including  damages resulting from sales of
                  SVR  place  and  route   software   lost  directly  to  Avant!
                  Corporation.  Avant! Corporation sold place and route software
                  that contained Cadence  Corporation's stolen computer code and
                  trade secrets head to head against the Company's software, and
                  this unfair advantage allowed Avant!  Corporation to acquire a
                  significant amount of the Company's sales and market share.

                  SVR has retained David H. Donaldson,  Jr. and Peter Kennedy of
                  the Texas law firm of George & Donaldson,  LLP and  California
                  counsel  Craig  Needham to  represent  it in this  matter on a
                  contingency fee arrangement.

                  Management  believes  that  the  ultimate  resolution  of  the
                  disputes and litigation  matters discussed above will not have
                  a material adverse impact on the Company's  financial position
                  or results of operations. A copy of the complaint can be found
                  on the SVR website at www.svri.com.

Item 2.           Changes in Securities and Use of Proceeds:

                  The Company received $75,000 in a private placement of 882,353
                  shares of Common Stock.

                  The Company issued a Warrant  Reduction Offer (the "Offer") to
                  investors who held  warrants to purchase  shares of our Common
                  Stock  ("Warrants")  at an  exercise  price of $0.53 per share
                  (the "$0.53  Warrants").  Under the Offer, such investors were
                  able to  exercise  the $0.53  Warrants  at a reduced  price of
                  either  $0.13 per share or $0.115  per  share.  Investors  who
                  exercised at the $0.115 price were prohibited from selling the
                  shares  acquired from the

                                 Page 18 of 21
<PAGE>

                  exercise  for 60  days  commencing  from  the  exercise  date.
                  Investors who exercised at the $0.13 price had no restrictions
                  on the sale of the  underlying  shares.  The Offer  expired on
                  Friday,  April 6,  2001.  During  the first  quarter of fiscal
                  2002,  45,000  Warrants  were  exercised  at $0.115 per share,
                  raising $5,000.

                  The  Company  received  $1,576.60  under  its  employee  stock
                  purchase plan.

                  The Company issued 55,556 shares valued at $10,000 in exchange
                  for services.

Item 3.           Defaults Upon Senior Securities: Not Applicable

Item 4.           Submission  of  Matters  to a Vote of Securities Holders:  Not
                  Applicable

Item 5.           Other Information: Not Applicable

                                  Page 19 of 21

<PAGE>

Item 6.           Exhibits and Reports on Form 8-K:

                                  (A) Exhibits:

Exhibit
Number        Description of Exhibit

(a)(1)   The  financial  statements  filed as part of this  Report at Item 1 are
         listed in the Index to Financial  Statements  and  Financial  Statement
         Schedules on page 2 of this Report.

(a)(2)   The  following  exhibits are filed with this  Quarterly  Report on Form
         10-QSB:

3.01     Registrant's Articles of Incorporation as amended to date (incorporated
         by reference to Exhibit 3.01 of Registrant's  Registration Statement on
         Form S-1 (File No. 2-89943) filed March 14, 1984, as amended (the "1984
         Registration Statement")).

3.02     Registrant's   amendment   to  Amended   and   Restated   Articles   of
         Incorporation   (incorporated   by   reference   to  Exhibit   3.02  of
         Registrant's  Quarterly  Report  on Form  10-Q  for the  quarter  ended
         September 30, 1998).

3.03     Registrant's  bylaws, as amended to date  (incorporated by reference to
         Exhibit 4.01 of the 1984 Registration Statement).

3.05     Amendment to Bylaws dated November 12, 1996  (incorporated by reference
         to Exhibit 3.04 of Registrant's  Quarterly  Report on Form 10-Q for the
         quarter ended December 31, 1996).

10.01    Form  of  Stock  Purchase  Agreement  among  the  Company  and  several
         investors dated as of June 27, 2001.

                            (B) Reports on Form 8-K:

No Reports on Form 8-K were filed during the quarter covered by this report.

                                  Page 20 of 21
<PAGE>

                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                              ILICON VALLEY RESEARCH, INC.


Date:       August 10, 2001                   /s/ James O. Benouis
            ---------------                   --------------------------------
                                              James O. Benouis
                                              President and
                                              Chief Executive Officer


                                              (Chief Financial and Accounting
                                              Officer)

                                  Page 21 of 21